Insurance for Freelancers
Insurance Guide for Freelancers
As a freelancer, you’re responsible for coverage that employees typically receive through their workplace. This guide covers the insurance types you need to consider and how to get adequate protection without overspending.
At a Glance
- Health insurance is your top priority—explore marketplace plans, spouse’s employer plans, or health sharing options
- Disability insurance protects your income if you can’t work
- Liability insurance shields your business from lawsuits and claims
- Life insurance matters if you have dependents relying on your income
- Retirement accounts (SEP-IRA, Solo 401k) provide tax advantages and long-term security
Health Insurance
Without employer coverage, you need to secure health insurance on your own.
Your Options
ACA Marketplace Plans Shop during open enrollment (November-January) at Healthcare.gov or your state marketplace. Many freelancers qualify for premium tax credits based on income. Plans are standardized by metal tier (Bronze, Silver, Gold, Platinum).
Spouse or Partner’s Plan If your spouse has employer coverage, joining their plan is often the most cost-effective option. Compare the added premium cost against marketplace alternatives.
Health Care Sharing Ministries Not insurance, but an alternative for some. Members share medical costs. Lower monthly costs but fewer protections and potential gaps in coverage.
Short-Term Plans Temporary coverage for gaps between other plans. Limited benefits and pre-existing condition exclusions apply.
Tax Deduction
Self-employed individuals can deduct 100% of health insurance premiums for themselves, spouse, and dependents. This is an “above the line” deduction—you don’t need to itemize.
Disability Insurance
Your ability to work is your most valuable asset. Disability insurance replaces a portion of your income if illness or injury prevents you from working.
Key Terms
- Own-occupation coverage: Pays if you can’t perform your specific job (preferred)
- Any-occupation coverage: Only pays if you can’t work any job (cheaper but less useful)
- Elimination period: Waiting period before benefits begin (30, 60, 90, 180 days)
- Benefit period: How long benefits last (2 years, 5 years, to age 65)
What to Look For
- Coverage of 60-70% of your gross income
- Own-occupation definition
- Non-cancelable and guaranteed renewable policy
- Elimination period you can cover with savings
Liability Insurance
Protects your business and personal assets from lawsuits, claims, and mistakes.
Professional Liability (Errors & Omissions)
Covers claims arising from your professional services—missed deadlines, work errors, or client disputes. Essential for consultants, designers, developers, writers, and other service providers.
Typical coverage: $1 million per occurrence, $2 million aggregate
General Liability
Covers bodily injury, property damage, and personal injury (like defamation) related to your business operations. Important if clients visit your workspace or you work on-site.
Business Owner’s Policy (BOP)
Bundles general liability with business property coverage. Often more affordable than separate policies.
Life Insurance
If others depend on your income—spouse, children, aging parents—life insurance provides financial security if something happens to you.
Term Life Insurance
Most freelancers need term life, not permanent life insurance. Term policies are affordable and straightforward:
- 10-20 year terms align with major obligations (mortgage, kids in school)
- Coverage amount: Typically 10-12x annual income, or enough to cover debts plus 5-10 years of family expenses
- Shop around: Rates vary significantly between insurers
When to Skip It
If no one depends on your income financially, life insurance may not be necessary. Revisit when circumstances change.
Business Property & Equipment
What to Cover
- Computer equipment and electronics
- Software and data (consider cyber liability)
- Home office furniture
- Professional tools and inventory
Coverage Options
- Business property rider on homeowners/renters insurance (limited coverage)
- Inland marine insurance for equipment used at multiple locations
- Business owner’s policy includes property coverage
Auto Insurance Considerations
If you use your personal vehicle for work (client meetings, deliveries, transporting equipment), your personal auto policy may not cover business use.
Options
- Hired and non-owned auto coverage (part of commercial policy)
- Commercial auto policy if you have a dedicated work vehicle
- Check your personal policy for business use exclusions
Retirement as Risk Management
Retirement accounts aren’t just for the future—they provide tax advantages now and financial cushion for emergencies.
Options for Freelancers
| Account | 2024 Contribution Limit | Best For |
|---|---|---|
| SEP-IRA | Up to 25% of net earnings (max $69,000) | Simple setup, high limits |
| Solo 401(k) | $23,000 + 25% of compensation | Employee + employer contributions |
| Traditional IRA | $7,000 ($8,000 if 50+) | Lower income, tax deduction now |
| Roth IRA | $7,000 ($8,000 if 50+) | Tax-free growth, income limits apply |
Freelancer Insurance Checklist
- Health insurance: Compare marketplace plans during open enrollment
- Emergency fund: 3-6 months of expenses before buying other coverage
- Disability insurance: Get quotes for own-occupation coverage
- Liability insurance: Professional liability if you provide services
- Life insurance: Term policy if you have dependents
- Business property: Review homeowners policy for equipment coverage
- Auto policy: Confirm business use is covered or excluded
- Retirement account: Open a SEP-IRA or Solo 401(k)
- Tax deductions: Track all insurance premiums for deduction
Next Steps
- Audit your current coverage—list what you have and identify gaps
- Prioritize by risk—health and disability coverage protect your income
- Get quotes—compare at least 3 providers for each coverage type
- Review annually—your needs change as your business grows